What does IPO (Initial Public Offering) mean?

An IPO is the first time a private company sells shares to the public, listing on an exchange so anyone can buy in.

An IPO (Initial Public Offering) is how a private company 'goes public' — it sells shares to public investors for the first time and lists on an exchange like the NYSE or NASDAQ. IPO stocks can be volatile early on since there's little trading history yet to anchor the price.

IPO (Initial Public Offering) example

A company sells 20 million new shares at $25 in its IPO, raising $500 million. If heavy demand opens the stock at $40 on day one, early IPO buyers profit — but anyone buying at the open pays $40, not $25.

Common beginner mistake

Expecting to get the IPO price. Most beginners can only buy once trading starts, often well above the price the big investors paid.